As your mortgage is likely to be the biggest financial commitment you will ever make, you will want to make sure that it is fully protected against all that life can throw at you. Any of the following events could seriously impair your ability to pay your mortgage and leave your home at risk of repossession.

  • Death
  • Long term illness
  • Disability
  • Critical Illness
  • Unemployment

Luckily you can protect yourself from the financial fallout generated by these events using a combination of insurance products. With a fully protected mortgage you can rest easy knowing you will keep your house whatever life throws at you.

The available mortgage protection insurances break down as follows.

Life Insurance

This straightforward policy will normally pay out a lump sum if one of the insured persons dies. The lump sum can be set to pay off the entire mortgage balance leaving the property mortgage free. The death of a loved one doesn’t have to be compounded by the loss of the family home.

Critical Illness Cover

Often combined with life insurance this cover will pay out a lump sum in the event that an insured person contracts one of a number of listed serious illnesses, for example cancer, stroke or a heart attack – specific definitions apply. It may also pay out in the event of total and permanent disability. This could ensure that lost income does not cause mortgage arrears and may also allow you to return to work at your own pace knowing that the mortgage is no longer a concern.

Payment Protection Insurance

This type of cover will pay out a regular monthly sum in the event that sickness or accident prevents you from working. Unlike Critical Illness cover it does not concentrate on only major illnesses. It will therefore pay out for almost any illness or disability which prevents you from working. The regular payments can cover your mortgage and associated bills can be arranged to continue until you return to work or your mortgage term ends. When you are fit to return to work again you may be able to go back without the stress of missed mortgage payments and arrears.

Unemployment Cover

Unemployment cover will insure you against the event of involuntary redundancy. It will pay out a regular monthly income in the event that you are made redundant. That regular payment can meet the costs of your mortgage and associated bills. It will usually continue to pay out for a maximum of 12 or 24 months or until you have found another job, whichever is the earlier. It may ensure that losing your job doesn’t also have to mean losing your home.

Buildings Insurance

This type of cover is obligatory, you need to have it before the funds are released for your mortgage. It covers damage to your property up to the cost of rebuilding it completely. If the property suffers from any structural damage this cover can be used to help you put it right. You can also include accidental damage which will cover you for the damage which you yourself might accidentally inflict upon your property.

Contents Insurance

All of your most treasured possessions are likely to be situated in your home, along with all of the practical goods you use for day to day living. Contents insurance will protect these items inside the home providing replacements or cash for example, in the event of a burglary, flood or fire. Accidental damage cover will protect them even if you break them yourself!

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